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There Is No Reason Why The NSA Should Be Spying On Petrobras

Brazilian President Dilma Rousseff at a Petrobras facility: the U.S. is spying on her and Brazil's oil giant - Image credit: AFP/Getty Images via @daylife

Documents leaked by NSA whistleblower Edward Snowden revealed that not only is the U.S. spying on Brazilian President Dilma Rousseff and her aides, but they are also snooping around PetrobrasPetrobras’ internal computer systems. This provoked outrage, suggesting U.S. intelligence agencies are clearly overstepping their bounds, going for commercial and economic information that isn’t justified by the bogus moral jurisdiction of national security.

My colleague Chris Helman, though, wrote a piece titled Of Course The NSA Should Be Spying On Petrobras. I believe he is plain wrong. The head of National Intelligence, James Clapper, also said its ok for the U.S. to spy on Petrobras “to enhance the security of our citizens and protect our interests.” This is a hypocritical statement that demonstrates how U.S. government agencies trample on the sovereignty of other responsible members of the international community under the veil of “national security.”

Petrobras is Brazil largest oil company. An integrated major, the company is majority owned by the Brazilian government and is run by Maria Graca da Fosters, who was personally appointed by President Dilma Rousseff. Its shares trade in the Sao Paulo Stock Exchange (Bovespa) and the NYSE, and it has issued more than $120 billion in debt. The company has a market cap of over $100 billion, and an EBITDA of $35 billion on $144 billion in revenues over the past twelve months.

It is by no means an efficiently run company, as Helman eloquently noted, and it is ripe with corruption and intimately tied with the current administration. Yet that by no means justifies surveillance on behalf of intelligence agencies. The only ones scrutinizing Petrobras should be its investors, analysts at Wall Street’s banks, credit rating agencies, and the people of Brazil who implicitly own the company.

Helman’s argument that “a weakened Petrobras means a weakened Brazil, which means a less stable South America” suggests there is a risk of destabilization. And if the recent massive protests that spread through Brazil this summer as a result of higher fuel prices, which were directly tied to Petrobras and massive subsidies, are any indication, then there could be a real threat to governability.

Yet going from there to suggesting democracy is at risk and a Brazilian version of Hugo Chavez could take charge is absurd. Despite a recent economic slowdown, the Brazilian economy remains resilient (it has grown to become the eighth largest in the world with GDP going from $553 billion in 2003 to over $2.3 trillion last year). While corruption is widespread, Brazil counts with a substantial amount of press freedom, the unemployment rate lies below 6% and inflation has remained in check.

Beyond the economics, a military coup is completely out of the question. Brazil, like several of its Latin American neighbors, managed to leave behind a history of brutal military dictatorships in the mid-80s which led to the emergence of strong political groups in support of human rights and democracy. Dilma Rousseff herself was a political prisoner and her rise to power is in part a reflection of the strength of these ideals; she won the presidential election by a landslide, taking 55% of the vote in 2010.

Back to Petrobras, Helman speaks of corruption as a major problem, exacerbated by the closeness of Petrobras’ management to the Rousseff administration. This corruption, though, is a domestic issue, as it is tied with Petrobras employees taking bribes, cheating on tax returns, fixing bids to fill their own pockets. There is no evidence that suggests this corruption could result in terrorist financing or other threats to U.S. national security.

It could, though, threaten U.S. national interests. During the administration of Lula da Silva, Petrobras discovered the massive pre-salt fields off the coast of Rio de Janeiro and Sao Paulo. Companies like Exxon MobilExxon Mobil, ConocoPhillipsConocoPhillips, and Chevron have all been involved in the Santos Basin, and they have all suffered from the infamous “Brazil cost.” Excessive red tape, high taxes, corruption, crime are all problems that companies operating in Brazil have faced.

But this is a business problem, not a national security problem. And these same companies, which have dealt with dictators from Africa to the Middle East, are responsible for those operational risks. Furthermore, they are accountable to their shareholders, and, at most, the Securities and Exchange Commission. Understanding the Brazil cost is an integral part of a global energy company’s due diligence process, not a matter for U.S. intelligence agencies.

In his statement on September 8, National Intelligence Director James Clapper puts gathering information “about economic and financial matters” on the same level as information about “terrorist financing.” Essentially, spying on Petrobras in order to have “an early warning of international financial crises” is equivalent to tracking down who is bankrolling Al Qaeda and Hezbollah. Imagine what would’ve happened if the Brazilian Finance Ministry had tapped Ben Bernanke’s phone and hacekd his emails to move ahead of his rounds of quantitative easing. Next time, Clapper and National Intelligence may do better spying on Lehman Brothers and Bear Stearns if they want to prepare themselves for financial calamity.

At the end of the day, the U.S. is the sole global superpower and the world’s largest economy. It has conducted itself with impunity in the past, and it has lashed out at others that have done the same to it. Its politicians are outraged when Chinese hackers infiltrate the private networks of American companies, but when the NSA is spying on Petrobras, it has to do with national security and predicting the next economic crisis. The worst part, is, as Helman put it, that this doesn’t surprise us. In his words: “if you’re surprised and disturbed that the U.S. government spies on other governments [and foreign companies] then you just need to wake up.”

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Augustino – thanks for keeping the conversation going. I have to respectfully disagree with you however that Brazil’s oil industry is just a “business problem” not a “national security problem.” Brazil may have discovered massive offshore oil reserves, but developing those reserves and growing oil production is far from a sure thing. It is absolutely in the national security interest of the United States to keep close tabs on global oil supplies because the United States remains such a large importer of oil. Any significant unexpected delay in Brazil’s oil production growth could have a very material impact on world oil prices. Oil price volatility has historically resulted in significant political volatility in all corners of the world.

Yes, yes… after all, those buildings that Brazilian terrorists put down was OH WAIT.

Really… your comments seems like coming from someone of Middle Ages or something. It is just too condescendent for someone to take seriously.

The USA commited terrorist acts too. But don’t be surprised. Some say that “those two buildings” were a act coming from USA government. But don’t be surprised either. The USA tortured people in Guantánamo – but don’t be surprised.

Seriously, you really got to think what if the sides were reversed. Would you think that it would be “for national security” ?

I think the problem here is now one of semantics – there’s almost no consensus on what constitutes US ‘national security’, just as the UK phone-tapping scandal led to a debate about what constitutes the ‘public interest’. Occam’s razor suggests that the NSA tapped Petrobras computers to extract economic advantage for the US, not to avert a clear and present danger to the country’s existence. (The NSA slides even said that the agency’s rationale for tapping the company’s computers was “economic”). We can all agree that visibility on Brazilian oil is pretty important for any importer. Future production is uncertain from Mexico and Venezuela, but output is forecast to double in Brazil by the end of the decade. But when you argue the links between intelligence on future pre-salt bounty and US national security, I think there are too many degrees of separation for most people?

Mister Helman (sounds jewish, right?), isn’t it a coincidence that you’re from Texas and you write quite about oil and pro energy enterprises & energy tycoons?! Why don’t you try to write about corruption in these sectors or in general in the US of A? What’s about the influence and impact exxon, chevron etc. has on the US politics, government(s), War and maybe on you?

Hey Vaz Pereira, based on your first comment it appears anti-Semitism is alive and well in Brazil. That’s one more good reason for the NSA to keep tabs on Brazil…

There were many Americans that did not think there was any reason to worry about Germany in the years leading up to World War II either. Obviously they were wrong, and I don’t think anyone would argue that is wasn’t a good thing to spy on Germany during that period.

And to further support Mr. Helman’s points in his article, it was reported in Der Spiegel that the BND (Germany’s intelligence agency) asked the NSA to target some German firms who were violating the embargo against Iran. That example clearly illustrates that targeting a multi-national can be for the common good and has nothing to do with industrial espionage. The multinationals work for their own interest, which does not necessarily align with that of their home country. Someone has to keep them honest.

Chris, The problem with your article was that 99% of it was irrelevant to national security. Perhaps the only relevant piece was the alleged allegation that Petrobas had illegal dealings with Iran (alleged being the key word).

Other than that your argument is a real stretch and that’s what makes it so dangerous.

It’s like me saying the U.S. should keep an eye on Canada, because as water grows more scarce in the next 30 years, its price will become an increasingly significant factor in political volatility. And making sure Canada (and its huge % of global fresh water supply) is aligned with US interests then becomes a matter of national security.

I’ll leave you with Ben Franklin: ”Any society that would give up a little liberty to gain a little security will deserve neither and lose both.”

I agree with you that Brazil’s oil reserves deserve a lot of scrutiny, and any major setbacks in their development of the pre-salt fields would result in oil price volatility.

I will also concede that it is absolutely in the US national interest to keep tabs on global oil supplies given its importance as a major importer.

Yet there is an ethical line between spying and “keeping tabs on.” If the US is that interested, they can have an active conversation with Petrobras, they can send helicopters or use satellites to keep up with progress on the Santos basin, but by no means are they justified in hacking emails and entering private computer networks.

Furthermore, this is happening under a veil of darkness so no one knows what that information is being used for. Hell, we don’t know what information they have.

Using intelligence resources to keep a tab on what Brazil is doing to develop one of the major oil fields in the world is one thing, hacking into their computer is another.

Exactly at this point you demonstrates the real interest of his country. You have to keep as an empire and explore the natural riches of other countries to ensure that you can step on the accelerator of his car isn’t? It doesn’t matter if this posture of you cause pain, suffering or death in other countries. If you have questions about our production capacity of our oil reserves, so recommend to North American oil companies that forget us, not invsitam in Brazil. Simple isn’t it? Rest assured, because Chinese companies or of other countries can be better partners than you.

Chris Helman has a long record of solid reporting. I don’t believe you can call into question his credentials or his background. Even though I agree with you that Big Oil has a big influence in Washington, it would be great for the discussion if you could point to some specific instances of corruption.

(sorry for my bad english) Christopher, based on your arguments, since what happens in U.S.A directly impacts economy in the entire world, should the entire world be monitoring private emails and communications of private american companies especially those that have strategic political value?

Despite the industrial espionage to be a an affront to national sovereignty of another country, and the theft of secrets industries to be in fact an act of war, and that there are international treaties, and multilateral organizations that abhor this kind of attitude, the NSA has indeed no reason to not steal secrets of Brazilian companies. But since that theft of trade secrets from other countries is a common practice of the U.S. government, to benefit U.S. companies, we indeed “need to wake up.”

Brazil can be highly benefited by not also need to follow any international treaties, since we respect the right of patents and industrial rights of other countries, and sent billions of dollars annually to the U.S. in the form of royalties from patents on products and services. So we can start breaking the patent rights of Monsanto, Microsoft, Apple, General motors, Carmark, etc because imagine if these American companies break, could jeopardize the stability of the whole America. Then we reverse the patent in favor of the Brazilian people, to improve national security, and compensate the theft in Petrobras, what do you think?